How Top Fortune 500 Companies Do Their Hiring Reference Checks

By Yves Lermusi | December 14, 2015

You might think that a company like Wal-Mart, which employs over a million workers every year, would be tempted to cut a few corners—such as skipping on reference checking—in its hiring practices. If so, you’d be wrong.

Wal-Mart, Frontier Communications, CVS Health, Apple, GE, and many other Fortune 500 companies are notorious for their hiring processes, which typically include both reference and criminal background checks as well as drug testing. Frontier, for example, informs prospective employees right on its website that “Reference checks, drug screens, and background checks will be conducted upon offer of employment …”

Smaller employers sometimes resist the idea of structured hiring practices, believing they hamper the flexibility needed to make decisions quickly. But when they realize the cost of a bad hire, they realize how crucial it is.

When you’re onboarding hundreds of employees at a time, consistency is an ally. And, if one bad apple can ruin the barrel, imagine the damage that 10, 20, or more could do. That type of disruption would be disastrous. No wonder Fortune 500s budget time and money on their reference check processes.

Still, this volume of reference checking is a huge feat. How do the Top Fortune 500s companies manage through it all?

Automation Is Key

The challenges of traditional reference checking are well known. Sources can be unresponsive and/or reluctant to rate an individual negatively for fear of being sued or because they don’t want to be responsible for someone not getting a job. Worse, sources can be biased both for and against candidates, and their prejudices aren’t a help to you (although it may appear that way at the time).

Fact is, no organization has time to waste playing phone tag or weeding through useless information, and Fortune 500s aren’t an exception to this rule. It could even be argued that Fortune 500s have less time to waste than other companies, because they’re always hiring for multiple roles. Their processes must be efficient and productive to stay on track.

That’s why it’s a common practice for Fortune 500 companies to engage the services of providers like Checkster to aid in the effective management of reference checking. Using sophisticated yet intuitive software, Checkster provides an online framework to structure and capture relevant data from a variety of sources and then sorts and summarizes that data for employers’ ease of use.

Automating the process—rather than performing it manually one grueling conversation at a time—makes terrific sense for many employers, including large employers who could probably afford to hire staff for this specific purpose.

But why should they? Automation leverages the power of collective intelligence, reduces the impact of potential bias, cuts costs, and saves time. Given all the pluses, it’s simply good business.

Keep It Consistent

Again, consistency in hiring is a good thing. The most scandalous cases of resume fraud occurred when hiring standards weren’t consistently upheld. For example, while Fortune 500 companies lead the way in reference checks for entry- and mid-level employees, they’ve also been known to sometimes relax that norm when hiring executives. Unfortunately, the double standard has contributed to many a troublesome hire.

Lack of consistency also neutralizes one of the best benefits of automated reference checking—added protection against claims of discrimination or other misuse of candidate information.

The Bottom Line

Hiring is a risky proposition, but when used consistently, automated reference checking reduces the risk. It’s what Fortune 500 companies do, and they’ve gotten to be the best of the best for a reason.

That said, allcompanies can do Fortune 500s one better, by implementing a process of reference checking for all potential hires, including executives.

How else do you think Fortune 500 Companies complete their reference checks?

About The Author

Yves Lermusi (aka Lermusiaux) is CEO & co-founder of Checkster.
Mr. Lermusi is a well known public speaker and a Career and Talent industry commentator. He is often quoted in the leading business media worldwide, including Fortune, The Wall Street Journal, Financial Times, Business Week, and Time Magazine. His articles and commentary are published regularly in online publications and business magazines. Mr. Lermusi was named one of the “100 Most Influential People in the Recruiting Industry” and his blog has been recognized as the best third party blog.

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